“The most important change in the bill that could impact wealthy clients is the stretch IRA, as we know it, going away,” Mioli said. “For instance, if I inherit my father’s IRA in 2019, I’d be able to take the RMDs over my lifetime. Under SECURE, the maximum stretch would be 10 years for ... non-spouse beneficiaries.”
Some considerations for 2020 are holdovers from last year’s tax reform. According to Craig Richards, managing director and director of tax services at Fiduciary Trust Company International in New York, one change from the Tax Cuts and Jobs Act that didn’t come into play until 2019 is the non-deductibility of alimony for splits executed or modified after 2018. Other big TCJA effects “remain changes in itemized deductions and the increase in the standard deduction,” Richards said, “most notably the state and local taxes deduction limit of $10,000 and non-deductibility of miscellaneous itemized deductions.”
More wealthy clients are getting caught up in the 3.8% net investment income tax (NIIT) on investment income, aka the Medicare surtax, enacted years ago and applied to AGI thresholds that were not adjusted for inflation. “Advisors should review clients’ 2019 tax returns to see if the surtax is applicable and implement strategies to reduce AGI below the threshold,” Mioli said.